[HISTORY: Adopted by the Town Council of the Town of South
Berwick 12-14-2010. Amendments noted where applicable.]
GENERAL REFERENCES
Asset capitalization policy — See Ch.
5.
Cash management policy — See Ch.
8.
Fund balance policy — See Ch.
17.
Tax payment application policy — See Ch.
45.
It is the policy of the Town of South Berwick to invest public
funds in a manner that will provide safety of principal, obtain a
market rate of return, meet the daily cash flow demands of the Town
and conform to all state and local laws governing the investment of
public funds.
This investment policy applies to all financial assets of the
Town as approved by the Town Council and approved Town warrants. These
funds include but are not limited to:
D. Enterprise funds including TIF accounts.
I. Custodial or escrow accounts.
A. All Town investments must be made with the judgment and care that
persons of prudence, discretion and intelligence, under circumstances
then prevailing, exercise in the management of their own affairs,
not for speculation but for investment, considering:
(1) Safety: the safety of principal and preservation of capital in the
overall portfolio;
(2) Maintenance of liquidity: maintenance of sufficient liquidity to
meet all operating and other cash requirements with which a fund is
charged that are reasonably anticipated; and
(3) Income: the income to be derived throughout budgetary and economic
cycles, taking into account prudent investment risk constraints and
the cash flow characteristics of the portfolio.
B. This standard shall be applied to the Town's overall investment
portfolio and not to individual items within the Town's diversified
portfolio.
The primary objectives, in priority order, of the Town's
investment activities shall be:
A. Safety: Safety of principal is the foremost objective of the investment
program. Investments shall be made by the Treasurer in a manner that
seeks to ensure preservation of capital in the overall portfolio.
To obtain this objective, the Treasurer shall use basic techniques
to diversify the investment portfolio. He/she shall utilize FDIC-insured
bank deposits and/or obtain collateralized investments that guarantee
the Town a perfected security interest in the underlying security.
Further, the Treasurer shall invest Town funds only in highly capitalized
and highly rated financial institutions.
B. Liquidity: The Town's investment portfolio will remain sufficiently
liquid to enable the Town to meet all operating requirements that
might be reasonably anticipated through cash flow analysis.
C. Return on investment: The Town's investment portfolio shall
be designated with the objective of attaining a market rate of return
throughout budgetary and economic cycles, taking into account the
Town's investment risk constraints and the cash flow characteristics
of the portfolio.
Authority to manage the Town's investment program is derived
from state law, 30-A MRSA §§ 5706 through 5719, and
the Town Charter. Upon approval of this document, the Treasurer shall
provide written procedures for the operation of the investment program
consistent with the investment policy. Such procedures shall include
explicit delegation of authority to persons responsible for investment
transactions. No person may engage in an investment transaction except
as provided under the terms of this policy and the procedures established
by the Treasurer. The Treasurer shall be responsible for all investment
or cash management transactions undertaken and shall keep the Council
fully apprised of the same.
Officers and employees involved in the investment process shall
refrain from personal business activity that could conflict with proper
execution of the investment program, or that could impair their ability
to make impartial investment decisions. Employees and investment officials
shall disclose to the Treasurer and the Council any material financial
interests in financial institutions that conduct business within the
Town, and they shall further disclose any personal financial/investment
positions that could be related to the performance of the Town's
investment portfolio.
No Town employee shall invest Town funds in any instrument or
institution in which he/she has a direct or indirect financial interest,
nor shall be/she accept any gift, free service, or payment of any
kind for performing his/her duties under this policy.
The Treasurer shall maintain a list of financial institutions
authorized to provide investment services. No public deposit shall
be made except in a qualified public depository as established by
state law. An annual review of the financial condition and registrations
of qualified bidders will be conducted by the Treasurer with the results
provided to the Council.
All security transactions, including collateral for repurchase
agreements, entered into by the Town shall be conducted on a delivery
versus payment basis. Securities will be held by a third party custodian
agreed to by the Treasurer, provided it meets or exceeds the minimum
risk category classification of GASB (Governmental Accounting Standards
Board).
A. To the extent possible, the Treasurer will match investments with
anticipated cash requirements. Unless matched to a specific cash flow,
the Town will not directly invest in securities maturing more than
one year from date of purchase. At least annually, the Treasurer,
at a time preceding the annual Town meeting, will present a cash flow
analysis showing the past year's performance and the projected
next year's performance using submitted budget figures. At this
time, the Treasurer shall also recommend what amount of surplus revenue
should be used to offset the next year's tax rate.
B. Trust and endowment funds may be invested in securities exceeding
one year if the maturity of such investments are made to coincide
as nearly as practicable with the expected use of the funds.
The Treasurer shall establish an annual process of independent
review by an external auditor, selected by the Council during the
annual Town audit. This review will enhance internal control by assessing
compliance with policies and procedures.
Investments will be carried on the Town's books at cost.
Interest on securities will be credited to investment income at the
time of the sale. The values of investment securities will be accrued
as of each fiscal year end.
The Council may contract with a qualified external money management
company in order to benefit from portfolio diversification, credit
research, full-time portfolio management and economies of scale that
are unavailable from the Town's staff. Any such contract will
define and control the risks of the portfolio and establish performance
criteria for monitoring and evaluating results.
The Town's investment policy shall be adopted by the Council.
The policy shall be reviewed by the Treasurer with the Council no
less frequently than once a year.
Nothing in the Town's investment policy shall be read to
contravene with state law, 30-A MRSA §§ 5706 through
5719 (the "Act").